Information on the sale of goods through the internet

The website has become a crucial method of communication for businesses today.Therefore, it is not surprising that many companies are using the internet as a medium for selling goods. As with any other type of business medium, it is important to have terms and conditions in place.

The relevant terms must be set out in writing as an online contract will be as enforceable as any other type of contract (See the specimen online terms and conditions for a specimen agreement). The specimen agreement contains general terms and conditions which may be included in these types of agreements. However, it may not be appropriate for all businesses.

To reduce the risk of legal challenge, it is important to ensure that your agreement is specifically drafted and regularly reviewed. You may also wish to review the guidance provided by the Office of Fair Trading which can be accessed from here.

If you sell goods to consumers through a website, it is important to be aware of the following regulations:

1. The Sale of Goods Act 1979 – This Act states that goods that are sold must be as described and of satisfactory quality.

If consumers discover that products do not meet these requirements they can reject themand ask for their money back providing they do so quickly. Alternatively, they can request a repair or replacement or claim compensation.

The Sale of Goods Act has been amended by the Sale and Supply of Goods to Consumers Regulations 2002. See fact sheet on Sale of Goods Law (Consumer Protection) for further information about this.

2. The Consumer Protection (Distance Selling) Regulations 2000 – Distance Selling Regulations give protection to consumers who shop by phone, mail order, via the Internet or digital TV: The protection includes:

• The right to receive clear information about goods and services (including information about the arrangements for delivery of the product and information about the seller) before deciding to buy.
• Confirmation of this information in writing.
• A cooling off period of seven working days in which the consumer can withdraw from the contract.
• Protection from credit card fraud.
See fact sheet on Sale of Goods Law (Consumer Protection) for further information.

3. The Unfair Terms in Consumer Contracts Regulations 1999 – prevents sellers from enforcing terms in a contract which are contrary to the requirement of good faith and which causes a significant imbalance in the rights and obligations of the parties to the detriment of the consumer. Sellers must also ensure that they use clear and plain language when drafting because transparency is an important part of fairness. These regulations provide significant protection to consumers and so must be adhered to very carefully by sellers. If a term is unfair, it will not be binding on the consumer. If an unfair term excludes or limits liability for unsatisfactory goods or poor workmanship, the consumer can sue for compensation regardless of it. If an unfair term is unenforceable, the rest of the contract may still be valid (unless it is unworkable without the unfair term). See fact sheet on Sale of Goods Law (Consumer Protection) for further information.

Assessment of fairness takes into account the nature of the goods or services, all the circumstances relating to the conclusion of the contract and the effect of other terms in the contract or another dependent contract. This means that a term considered fair in one agreement is not necessarily fair in another.

Consumers should have the opportunity to read all the terms and conditions before agreeing to the contract. Therefore, you should ensure that the terms and conditions are clearly accessible on the website. You should consider providing your terms and conditions as a single printable document for easy access.

4. The Data Protection Act 1998 – The purpose of the Act is to protect the rights of the individual about whom data is obtained, stored, processed or supplied rather than those of the people or organisations who control and use personal data. The Act applies to both computerised and paper records depending on the type of filing system.

If you wish to pass on individuals’ details to other organisations or wish to contact them about promotions in the future, you must obtain their consent to this. Provisions of this kind may be acceptable where there is a free choice to agree to them or not, for instance, via an option separate from the rest of the contract. But note that fairness is much more likely if consumers have positively to “opt in”. A chance to “opt out” in small print may be missed or misunderstood. In any case the chances of fairness will be increased if the significance of the
choice is indicated and drawn to the consumer’s attention.

The Act requires that appropriate security measures will be taken against unauthorised access to, or alteration, disclosure or destruction of personal data and against accidental loss or destruction of personal data. For further information, refer to the fact sheet on The Data Protection Act 1998. It is important to ensure that your terms and conditions contain anappropriately worded privacy policy.

5. The Electronic Commerce Regulations 2002 – States that when selling online, information must be given in a clear and ambiguous manner about the technical steps to complete a contract, prices must be clearly stated, details must be given about the supplier (in particular, the name and address (and registered office address if this is different) e-mail address, the company's registration number, any Trade or Professional Association memberships and the company's VAT number) the fact that any orders must be acknowledged without undue delay and there must be available to the user of the site the ability to identify and correct any errors prior to the placing of their order.

6. The Electronic Signatures Regulations 2002 – The Electronic Signature Regulations apply to any contract and not just those entered into with consumers. The main effect of the Regulations is to make electronic signatures legally valid. Signatures are not actually necessary for the conclusion of every contract, but they can have three essentialfunctions when considering on-line contracts:

• To identify the person who has bought the product;
• To indicate a personal involvement, or trustworthiness; and
• To indicate an intention to be bound to the contract.

The method of collecting the electronic signature will vary, depending upon the goods being sold. Generally, the purpose of having an electronic signature is the third function listed above – indicating that the purchaser is making an offer to contract.

Excluding liability
It is not advisable to exclude liability when dealing with consumers. You are never able to exclude liability for faulty goods or death and personal injury. If a consumer makes a mistake when entering details online, s/he should be given a reasonable opportunity to correct the error before they place their order. If you fail to do so, consumers will be entitled to rescind the contract (unless a court orders otherwise).

Links

Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX.
Tel: 020 7211 8000
www.oft.gov.uk

For consumer related queries contact Consumer Direct on 08454 04 05 06.
www.consumerdirect.gov.uk

This fact sheet was prepared by the Commercial Unit of Abbey Legal Services. It is intended only as a guide and is not to be regarded as a substitute for consultation with one of our Legal Advisors, since every case will ultimately turn on its own particular facts and circumstances. Should you require legal advice please contact Abbey Legal Services on 0845 0727 727. If you are driving when using the legal advice service, please make sure it is safe and legal to do so.